With more than 60 per cent of the cargo movement being done by the road network, the focus will be on road infrastructure which in turn, will provide great impetus to the growth prospects of road construction equipment. Equipment India trains a spotlight on the emerging scenario.
In order to target a double- digit growth, the government will invest substantially on infrastructure and the same should be over nine per cent of the GDP. With more than 60 per cent of the cargo movement being done by the road network, the focus therefore, will be on the road infrastructure.
A well-developed road infrastructure is instrumental in the social and economic growth of a country. India has a huge total of 3.3 million kilometres of road network to develop, which includes 70,548 km of national highways. The national highways constitute two per cent of the total network but carry 40 per cent of the traffic while state roads comprising 13 per cent of network, carry another 40 per cent. Rural and other roads account for 85 per cent of the road network and carry the remaining 20 per cent traffic.
However, the country's road network needs a major upgrade since even in the national highways, 27 per cent is single-lane/intermediate range; 54 per cent is two-lane and only 19 per cent is four-lane or more. The government is encouraging private sector participation by working out Public-Private-Partnership (PPP) deals in the road sector, in order to be able to meet the growing need of road development.
"To meet the demands of planned investments, the market will more than double between 2009 and 2014, with a noticeable increase in sales of all types of construction equipment used for road-making," says Samir Bansal, General Manager-India, Off-highway Research.
Speaking about the growth drivers, Samir says, "It remains the most important sector, that will act as a demand driver in the near future. A detailed work plan has been developed by the government to award around 12,000 km of national highway projects every year until 2012, to be able to achieve the targeted completion in 2015. This entails construction of 7,000 km of national highways every year for the next five years. The total estimated expenditure for construction of various phases of NHDP is Rs 235,690 crore out of which Rs 35,681 crore is the expenditure target for the construction of various national highway projects in the current fiscal year." He further adds, "Other main drivers for the road sector are the Pradhan Mantri Gram Sarak Yojna (PMGSY), Special Accelerated Road Development Programme for the North Eastern Region (SARDP NE) and the state highway development programmes that are being undertaken in various states of the country."
For over a decade, road-building activity in India has offered major growth opportunities for the construction equipment industry. Today, the Indian customer is much more appreciative of the modern technology available today. He is looking for high efficiency in terms of productivity and low costs of operation; and productivity of engine utilisation that translates into power on one hand and fuel economy on the other. Only advanced technology can give this combination. Many Indian customers also seek better technology, operator comfort, ease of use and maintenance, etc. If brand image was one of the major factors in buying equipment, as many deals suggest, things are now changing; there are more aware buyers today, who look beyond the initial investment to lifecycle costing where brand doesn't matter.
"As the spend on infrastructure increases, the balance between building infrastructure and conservation of environment would be a challenge. It is therefore important to adopt and implement technology and knowledge that is available globally and brings them to India quickly," opines Nandagopal, Vice President, Equipment Projects Solutions, TIL.
Says Nandagopal, "TIL, as a responsible nation- builder, has brought in the hot mix asphalt plant technology from Astec Inc to India. This plant has been a big success across the US with focus on central plant recycling for producing a very homogenous asphalt mix using RAP (Reclaimed Asphalt Pavement) of up to 50 per cent . The recycling of the existing pavement for rehabilitation / reconstruction of the existing roads provides advantages such as reduced cost of construction, conservation of asphalt and aggregate, preservation of existing pavement geometrics, preservation of the environment and conservation of energy." Nandagopal points out that the NHAI has advocated the use of recycled existing bituminous material to upgrade an existing bituminous pavement in NHAI Project. TIL has taken lead in bringing a technology from Astec Inc for processing of the reclaimed asphalt pavement.
Nandagopal further adds, "The use of the RAP helps customer recover hundred per cent of the aggregate and the residual bitumen in the RAP. The savings is substantial for the customer with no compromise on the quality of the mix. Going forward in the road construction industry, the use of RAP will be predominant and TIL ASTEC Double Barrel Hot Mix Plant will be a cost- effective solution for the customer."
As per the Off-Highway report, Gujarat Apollo leads the overall market for asphalt finishers but Wirtgen dominates in the large, over 9.0 m, segment. JCB controls three-fourths of the backhoe loader market, while L&T-Case leads in compaction equipment, with major participation from Volvo, Escorts and Greaves. The market for crawler dozers continues to be dominated by BEML; however, Komatsu and Shantui have been gaining ground. There is fierce competition in the crawler excavators market with an ever-increasing number of suppliers but it continues to be dominated by Telcon and Komatsu. Caterpillar is the largest supplier in the wheeled loader segment, which has witnessed the entry of a number of Chinese suppliers. Komatsu and Caterpillar account for the majority of motor graders sales.
The long-term outlook for sales is positive due to the sheer scale of work yet to be done in the infrastructure sector and the ability of the market to absorb this demand. The growth potential for the next five years is only limited by the speed of the government's decisions to start the projects. Even if the government decisions are slow in being made, the necessity of these projects will sustain the growth of the construction equipment industry well up to 2014 and beyond. As shown in the table, Off-Highway Research forecasts that the market of these machines will increase rapidly in the next five years, with an astonishing growth of 36 per cent expected in 2010. To meet the demands of the planned investments, the market will more than double between 2009 and 2014, with a noticeable increase in sales of all types of construction equipment used for road making.
India: Sales and forecast of select construction equipment, 2009-2014*
*Forecast Source: Off-Highway Research